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“Are you protected against payment shock?” is a question you should ask your mortgage partner, whether this is your broker or mortgage provider, suggests Angela Calla, AMP, Dominion Lending Centres - Angela Calla Mortgage Team. “That’s how you gauge your partner’s mortgage intelligence,” she says. “When you’re asking whether you’re protected from market changes, the answer should be, ‘No.’”

Nobody is immune to changes in the mortgage market, not even people with a fixed interest rate, Ms. Calla stresses. “When you have a mortgage, you need to make consistent modifications in order to optimize your mortgage for the current situation.”

Payment shock typically refers to any significant increase in monthly liability, which can heighten the risk of loan default, she explains. “That’s why stress tests are in place – to ensure people can afford their mortgages in different interest rate environments. With our clients, we proactively reach out to alert them to market changes and suggest what steps they can take.”

Strategies may include increasing payments slowly over time or making one-time payments that can contribute to the equity in the home or give the borrower more options for going forward, but any modifications have to take the lender’s parameters for prepayment privileges and penalties into account, says Ms. Calla, who sees protecting people from changes in the mortgage market as a collaborative process that should happen continually.

“It’s all about getting the right advice and understanding how your mortgage can be managed taking your personal situation as well as the market into account,” says Ms. Calla, who recently published a book titled The Mortgage Code, which is available on Amazon.


This content was produced by Randall Anthony Communications. The Globe’s editorial department was not involved in its creation.